Air Canada experience may help it survive fuel prices

Air Canada’s past experience with major challenges and crises, such as the SARS scare that temporarily crippled Toronto’s tourism industry and the September 11, 2001 terrorist attacks, places it in a good position to survive the record high price of oil and other economic difficulties that continue to trouble the air travel industry. Robert Milton, the CEO of ACE Aviation Holdings, the Canadian flag carrier’s parent company, tried to reassure shareholders and public opinion that Air Canada did not face an existential crisis and that it has an enviable history of navigating its way through past difficulties.

Most analysts believe that Milton is correct in pointing out that Air Canada is not faced with the same crippling predicament that most US airlines must now confront, even though $140 per barrel oil is a major concern for the Canadian flag carrier as well. Yet unlike its American rivals, there is no real fear of bankruptcy, and this is also the case for WestJet, Canada’s second largest airline. This does not, however, mean that Air Canada will be able to avoid major cutbacks. Although the airline has not followed the American lead when it comes to slashing routes and flight frequency, it has announced that it will go ahead with up to 2,000 job cuts and lay-offs and may also reduce capacity by around 7 percent.

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